Video Summary:

In this video, Andy Gale from Gale & Vallance, a business law firm in Orange County, explains why non-doctors cannot legally own a medical practice in California. Andy shares a real-life example of a client who invested in a medical corporation, only to discover later that, as a non-doctor, he was prohibited from being an owner. The video highlights common legal mistakes people make when setting up medical corporations, especially when using online services like LegalZoom, and outlines the proper way non-doctors can be involved through management services, without violating California’s strict corporate ownership laws.

To learn more about this situation, check out our in-depth article answer if a non-medical professional can own a medical practice.

Please note: This video and transcript do not constitute legal advice. If you are wondering, “can a non-doctor own a medical practice in California?” or have any similar legal questions, we highly recommend you contact a qualified attorney to discuss your specific situation and receive tailored legal guidance.

Why This Client Asked: Can a Non-Doctor Own a Medical Practice in California? (00:00:00 – 00:01:12)

I had a client call me, a 20% shareholder in this corporation with a doctor. What he was bringing to the table for the doctor is that the doctor wanted to provide medical services, and the business guy was very good at the business stuff.

He could put the administration together, he knew how to do the billing, he knew how to take care of the insurance and run the phones, run the staff, and all that sort of stuff. He just didn’t know anything about the medical side.

So, he said, “Why don’t we work on this relationship where I’ll just do all the backend administration stuff?”

One of the first questions I asked him was, “Whoa, are you a medical doctor?”—which is the first on the list of people who can be owners of a medical corporation. He said, “No.”

Then I said, “Well, are you one of these other related professionals? Are you any of these ten people?” And he says, “No, I’m just a business guy.”

I said, “Well, okay, then you cannot legally be an owner in that corporation.”

That was problematic for him because he’d invested $25,000 into the business and was planning on investing another $25,000 into the business… and he can’t be an owner of it.

LegalZoom Didn’t Answer: Can a Non-Doctor Own a Medical Practice in California? (00:01:12 – 00:02:01)

It’s a very common experience for me to have people call me after they have gone to LegalZoom to create the corporations.

At one point or another, they realize that there is something wrong—maybe they can’t fill out a form, they don’t have some of the information that someone is asking for—and they know there’s a problem. They just don’t know what it is, or frequently, how serious it is.

So they’ll call me, like this guy did, and say, “Hey look, I’m just trying to make certain that all of the paperwork that I’ve got states that my investment is secure and I own this thing.”

As he started to unravel it, LegalZoom didn’t explain to him, “Oh by the way, you can’t do this.” And he couldn’t.

He didn’t have the ability, first, to understand that there were three completely different codes that related to the formation of the professional corporation. He didn’t understand that there were restrictions on ownership.

Unraveling the Legal Mistakes (00:02:01 – 00:02:41)

All of the work that he did through the internet law firm didn’t explain it.

One, they didn’t tell him. And two, he just didn’t know what he didn’t know. That was his problem.

So, they call me, and I start to help them unravel. They tell me what the problem is.

Because I do understand how all the pieces move together, we’re able to decipher the problem and explain it to him.

To fix the problem, he needed to unravel his investment in this medical corporation because he couldn’t do what he had done—and what he was continuing to do more of.

How Non-Doctors Can Still Work With Medical Practices (00:02:41 – 00:03:07)

I think the solution is that they each have their own company.

The businessman could render services to the doctor’s medical corporation, and the doctor’s medical corporation could pay the businessman’s management company for the services provided in managing his company.

That way, they could have a relationship, but not through ownership—because he thought it was going to be.

[Music/Closing Segment] (00:03:07 – End)

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Conclusion: Can a Non-Doctor Own a Medical Practice in California?

This real-world example highlights why it is crucial to understand the legal limitations before investing in a medical practice. In California, non-doctors cannot legally own or have a direct ownership stake in a medical corporation.

However, non-doctors can participate through separate management or administrative services companies, providing support services without violating corporate ownership laws.

If you’ve ever wondered, “can a non-doctor own a medical practice in California?”, the answer is no—ownership is strictly limited to licensed professionals. For personalized guidance, always consult with a qualified attorney before making any business investments in the healthcare field.